TMN Ask A Lawyer: Just who gets a a cut from band merch?
TMN Ask A Lawyeris a semi-regular column where our readers receive expert legal advice from a renowned entertainment lawyer.
Q: My band wants to start our own clothing label. We're basically signed to a 360 deal with our label; can we still get 100% of the profits the clothing label makes?
A: If you have signed a 360 deal with your record label then it is likely that you have agreed to pay your record label a share of all income you receive from your activities as a band in addition to recording, including publishing, touring, sponsorship and merchandising. This is sometimes referred to as a passive share of income as you are required to pay the label a share even if they are not involved in generating that income.
The provisions in a recording agreement that deal with non-recording income are generally fairly broad so as to include all possible income a band may earn. The rationale from the label’s perspective for the inclusion of these provisions is that the income generated from exploiting a band’s recordings has been decreasing rapidly over the years but the label’s investment into creating and marketing a band’s recording has a flow-on effect on a band’s profile and generates or increases income in other areas of activity such as touring and merchandising. Further, it is more difficult or more risky for a label to rely on recording income alone to recouptheir investment into a band.
Merchandising income is income that is received from selling merchandise related to the band and the band’s recordings and includes clothing. Usually this would be items that included the bands name, image or artwork used in relationto the band’s recordings. So, you may argue that a clothing label would not be identifiably related to the band particularly if it did not include the band’s name or image or album artwork and that it is not reasonable for the record label to receive a share of that income. However, in most cases the definitions of merchandising income in a 360 record deal are broad enough for an argumenteither way. If the band has the benefit of foresight when negotiatingtheir recording agreement andknow that setting up a clothing label is a possibility they shouldeither try to exclude merchandising income from the agreement or at least to specifically exclude income from a clothing label or those items onthe label that do not include the band’s name, image or album artwork.
:: ASK A LAWYER – BAND MANAGEMENT
:: ASK A LAWYER – BREACH OF CONTRACT
:: ASK A LAWYER – LABEL SHOPPING
:: ASK A LAWYER – P2P FILE SHARING
:: ASK A LAWYER – WHAT'S IN A NAME?
:: ASK A LAWYER – GIG CONTRACTS
:: ASK A LAWYER – STREAMING EXPLAINED
:: ASK A LAWYER – MUSIC VIDEO COPYRIGHT
:: ASK A LAWYER – THE PARODY LAW
:: ASK A LAWYER – DEVELOPMENT DEALS
Julia Koskyworks for Brett Oaten, whoestablished his legal practice during the grunge era, and specialises in music and other entertainment matters. In the music industry Oaten principally represents artists and some current clients include 360, Angus & Julia Stone, Empire Of The Sun, Lorde, and Troye Sivan. Oaten is also a founding board member and life member of FBi Radio.
Submit your questions toinfo@themusicnetwork.comor tweet them at us:@themusicnetwork
To read more about Brett Oaten and to get in contact, visit his firm’s official websitebrettoaten.com.au. Oaten tweets at:@brettoaten
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